Great Clips CEO on Coronavirus Impact on Retail

for you guys? Right now? It's really crazy. I say your team in our our green room, and they're like, we've been NonStop. Yes we have. We have, and we've got across the U. S And Canada. The franchise is they employed forty thousand stylus. We do over two million haircuts a week. So there's a out of moving parts that we've got to manage as we represent the Great Clips brand. Are you down? Not yet? What we want

to do? The reason I'm here in New York we're headquartered in Minneapolis is we preach balance and calm, and we also want to be smart and forward thinking and we want to be nimble, um, and I wanted to come out of rather than saying, hey, I'm gonna avoid New York City, because that's what we talked to Our franchise is about. We we want to do the right thing, but we want to have what I call an agile mindset to what a good decision today maybe a different

decision tomorrow. And the decision I'm making for tomorrow may have to change by tomorrow night. And that that agile approach is key as we're a retail business and people have to put their hand in our door handle to come in. But at the same time, we are going to be careful and we're gonna be our customers. We want to protect our stylus. We we have that care as an element of who we are. And so it's a balance that right, Well, and let's take it a

step further. In addition to you know, people putting their hand on your door handle, you know, getting a haircut is a pretty intimate act, you know, darn. You know, like there's a lot of like human to human contact and something you know, in the age of social distance that we're worrying about. You also have a franchise system. How do you sort of ensure that everybody is doing the right thing well on the first point, on the social distance, it is interesting to hear people talk about

stay six ft apart, three ft apart. Well, a haircut your zero right. So we cleanliness, sanitizing. I mean, that is a big part of what we have done since our start. It's what all hair salons do. I mean, our stylists are very skilled at the cleanliness and sanitization because we do that every day. We are ramping it up. How do we do more? How do we have more diligence?

Do more of that now? But that's a key thing, So Jason, as we work with our franchise e s, we we we we explain that, but we give them tools. And we have a big community Asian going out literally in the next forty minutes to our franchisees and and uh and so how do we communicate with them and give them tools so they can deal with their staff and and be pillars in their community, but yet be smart about this whole situation. Hey, I gotta ask, is Steve.

One of the conversations we've been having here in the newsroom is Okay, so what do you do you know some of us work for companies where if we stay home, we're gonna get paid and there's no problem about that. We can make the mortgage, we can pay our bills, no matter kind of how long this goes on. For a lot of workers are hourly workers that if they don't show up, they don't get paid. So I'm curious.

Tell me about your policy that you want a sick worker to stay home, but they might not because they need They know they need to come to work because they can't afford not. So what are you doing to ensure that workers who maybe should stay home due Um, I'm just curious. Yeah, And it's it's what we're faced with. We have great jobs and great clips, salons and and uh, as I said, we have forty stylists, but they are hourly wage workers. That's just the great jobs. But there

are early wages, so that is that balancing act. I'm talking about where they want to work because that's they don't want disruption. But yet there is disruption, and there's epicenters around the country, and and we work with franchise e s. How do they how do they move staff between their salons if they can, how do they kind of handle reducing hours possibly rather than just laying off people, how do they uh manage and work? Because when this passes, they want to ramp back up. So the goal here

isn't for franchise e's. They're not just saying I'm going to get rid of employees. They're struggling with it because they want to keep employees. They know that their livelihood is based on being paid. But tips are down, and so how do you don't have a policy to say, listen, you're sick, you can stay for you. Well, the franchise see again that that we have the layer where the employees aren't Greek clips and employees and a franchise system

of the employees of the franchise. So we work with the franchise's to say, hey, if your employees are sick, suggests they stay home. They have to do that, that's the smart thing to do. But the employees have to admit, hey, I'm not feeling well. I mean, we don't have we're not franchisees aren't taking temperature. So will the franchisees pay

them if they stay home? Some of them will, and I know some of them are doing that, and that they're saying, how do we I want this employee to be a great employee and this is unfortunate that they don't feel well in this situation, So how do I

keep them? And some will absolutely pay their employees in a self quarantine or stay home because frankly, we have more customers coming into our salons and the first ten months of this year have been awesome, best best first ten weeks, excuse me, not months, ten weeks, then the last four or five years, and now this coronavirus is going to take the edge of but we know when this passes, if it does sixty days, ninety days, five months,

customers are going to come roaring back. Because we're we're normously don't know that yet through last Friday, uh and the Great Clips Business weekends on Friday, we've had a great start to the year. Do I expect that the slowdown when you've heard all the cancelations today? I mean Ohio even closed their schools this afternoon and right, and so that's going to have an impact, and we do

not have our heads in the sand. You are listening to Bloomberg Business Week still with a Steve Howckett, CEO of Great Clips, and Steve, I'm guessing you thought, wow, we've got these great partnerships lined up. NHL, people love hockey. You had a really cool like hashtag hockey hair uh thing going on promotion that leverages social media, March Madness, best time of the year. Well here we are, no March Madness, NHL suspending its season. How do you react

to something like that. It's really interesting. It's moving so fast because yesterday the n C Double A was doing no fans and stands and and when we started, yeah, but we could work with that and uh and in the NHL had still there, hadn't suspended their season, and then you know, by a little bit ago with the n C Double A canceling March Madness, Yeah, we're done.

We love both of those those uh entities, those groups, the n C Double A, the National Hockey League, what they represented to our our customers, because our customers are their fans and their fans are our customers across the U. S And Canada for both. We're excited to launch this n C Double A March Madness partnership and it's really a multi year relationship with all in n C Double

A Sports starting now. Yeah, we're it's a bit disappointing, but we understand because the the the health of the fans, the health of all the athletes in both sports is really key. Well, it's a reminder that you know, we tried to figure out the costs of the virus, and we understand when events don't happen or you don't take

a trip or so and so forth. But right this is kind of antillarya in terms of revenue generating, right for you guys, But it's going to impact it sure because you do these partnerships and sponsorships because you want you want to grow your business. Right well, yes, exactly, and you want to grow your business. So the fact that there the n C Double A canceled, March Madness is gone. We're gonna still work with the n C Double A, and we hope next year with Martin Magin

March Madness, we come out. All of us are going, hey, I'm my bracket. I can't wait. Um. But the NHL depends on how this coronavirus plays out over next couple of months. They may have some of their playoffs, they may have a way to do that, and we're working with them and and if they do that, we will be a part of that, and we're we would be excited to to continue to leverage that relationship. So what would you say is that the thing that is most

misunderstood about your business at this point? I mean haircuts. You can't take them online, so you don't need to worry about Amazon necessarily getting into your business. Uh, hope, hope um. And to leave me as someone who is a great Clips, longtime great Clips customer. I've tried it at home even with my complete or almost total lack of hair, I still look better if I have a professional do it. But what's a challenge that, Well, you get your hair cut like every week or two weeks. Yeah,

what's at a number two or three all over? Let's say it's a one one and a half. Okay, I'm not a stylust now close. Yeah it's a little long clippard. We're talking about clipper guard carols. Like, what are these numbers make? I have no idea what you're talking about. So, yeah, our our business is uh, it's an awesome business because

we deal with every day. But you started as as a franchise, started as a franchise as twenty seven years old in low number hundred and fifty and now we have over so I've seen Great Clips grow and expand and I've been there, not at the start, but when we already going kind of the frontier days and now we're very well established. UH and so it is it's a we Last year we did hundred and twelve million haircuts.

This year a hundred hundred and twenty million haircuts. We touched people insuing stat um last year we had thirties six million unique customers come in, so out of the US and Canada, that's almost ten percent of the population was a unique customer to Great Clips. And we're just the small little franchise system out of the heartland that's the biggest hair care chain and uh in North America

but basically the world. Two quick questions, husticky is it once you get a cut customer, how long do they stay with you? And how much you know does it then extend to the broader family and that kind of thing and your app? How does that help in driving business? Because digital is so so the first part Um. We we we track our customers. Every customer comes in, we know when they come in, we know when they come back, We track if they come back within a set period

of time. We know that that's important to growth. We know when people come in and then don't come back on their cycle, which means they probably to a competitor, So how do we market to them. We know a customer comes in seven or more times a year, we call him a great customer. Is awesome. They're probably coming to us for every one of their haircuts, thank you, Jason um And and so we track all that because we have the data and that that is very important

to us. Again, we're a haircut, but we're we innovate around that haircut with technology and we know our customers and so the app can totally change our business. We have twelve and a half million downloads of the app right now. We do about two and a half three million downloads a year. But it's really that you can check your weight times and then you can get on the wait list, so you on your time, you burn up your any weight that you have versus citing in ours.

That was the brilliant that that's the brilliance of it is is the weight time. Yeah, And the key for us and CURL to your point is seconds. The algorithm works. That's the key to online checking all right, you're gonna have to come back and see us. We've got a lot more questions for you. Really appreciate the visit. Steve Hockett, CEO of Great Clips, and good luck through everything because I know it's a tough time for everybody.